Wall Street Today | Fed's $8.6 Trillion Balance Sheet a Focus as Banks Seek Cash
MACRO
FHLB Issues $304 Billion in a Week as Banks Boost Liquidity
The Federal Home Loan Bank System issued $304 billion in debt last week, according to a person familiar with the matter. That's almost double the $165 billion that liquidity-hungry lenders tapped from the Fed.
The FHLBs are a Depression-era backstop originally created to boost mortgage lending. The system is known as the "lender of next-to-last resort" — a play on the nickname for the Federal Reserve's discount window.
Fed's $8.6 Trillion Balance Sheet a Focus as Banks Seek Cash
The various liquidity programs added about $300 billion to the Fed's balance sheet last week, reversing about half of the reduction the central bank has achieved since the runoff began last June. But some economists say the two tracks can work in tandem, with the banking efforts targeting financial stability and QT remaining a steady part of the Fed's plan to remove the support it provided during the pandemic.
Goldman Expects Fed to Pause in March, Resume Hikes in May
$Goldman Sachs(GS.US$ says stress in the banking system makes it likely the Fed will instead pause in March, then potentially resume interest-rate increases at its May, June and July meetings.
Morgan Stanley Strategist Says Bank Stress Signals Bear Market End
"With the back-stopping of bank deposits by the Fed/FDIC, many equity investors are asking if this is another form of QE and therefore 'risk on'," $Morgan Stanley(MS.US$'s Michael Wilson wrote in a note. "We argue it's not, and instead represents the beginning of the end of the bear market as falling credit availability squeezes growth out of the economy."
SECTORS
Sprott Sees Gold Hit Fresh Record as Banking Crisis Unfolds
Gold prices could surpass the record set at the height of the Covid-19 pandemic if ongoing turmoil in the banking sector persists and global central banks downshift their interest-rate hiking cycle, according to Sprott Inc., a top investor in the bullion industry.
The haven asset briefly rose above $2,000 an ounce on Monday for the first time in a year as a deal to buy Credit Suisse Group AG failed to calm fears over the global banking industry.
COMPANY
First Republic Dives 47% to Record Low on Downgrade, Bank Talks
$First Republic Bank(FRC.US$'s shares tumbled 47% to an all-time low after S&P Global lowered its credit rating for the second time in a week and as executives from major banks discussed fresh efforts to stabilize the lender.
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Amazon to Cut 9,000 More Jobs After Earlier Layoffs
$Amazon(AMZN.US$ said it would cut 9,000 more corporate jobs across units that include its profitable cloud-computing and advertising businesses, a sign that the company's cost-cutting is extending into all aspects of its operations as technology giants continue to slash spending.
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First Citizens Continues Pursuit of Silicon Valley Bank
$First Citizens BancShares(FCNCA.US$, one of the biggest buyers of failed US lenders, is still hoping to strike a deal for all of Silicon Valley Bank, according to people familiar with the matter.
OpenAI-Powered App from Microsoft Will Instantly Transcribe Patient Notes During Doctor Visits
$Microsoft(MSFT.US$'s speech recognition subsidiary Nuance Communications on Monday announced Dragon Ambient eXperience (DAX) Express, a clinical notes application for health-care workers powered by artificial intelligence.
Source: Bloomberg, Dow Jones, CNBC
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